Question

Crane Limited purchased 50,000 call options during the year. The options give the company the right...

Crane Limited purchased 50,000 call options during the year. The options give the company the right to buy its own common shares for $8 each. The average market price during the year was $10 per share. Assume that Crane also wrote put options that allow the holder to sell 50,000 of Crane’s shares to Crane at $11 per share.

QUESTION:

Calculate the incremental shares outstanding for Crane Limited. (Round answer to 0 decimal places, e.g. 5,275.)

Incremental shares outstanding : ________ Shares
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Sol - The answer to the above problem is as follows -

In this question we have to find incremental shares outstanding

Given,

Long call Option Strike price given is = $8

Average Market price during the year = $10

Long Call Option excercised = 50,000

Note* Average market price during the year > long call option strike price therefore long call option will be excercised

Short call option strike price is = $11

Average market price = $10

Note* In this situation Average market price is < short call option therefore no short call option is excercised.

Incremental shares outstanding = Long call option Excercised - Short call Excercised

= 50,000 - 0 = 50,000

Therefore, incremental shares outstanding of crane limited are 50,000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Crane Limited purchased 50,000 call options during the year. The options give the company the right...
Crane Limited purchased 50,000 call options during the year. The options give the company the right to buy its own common shares for $8 each. The average market price during the year was $10 per share. Assume that Crane also wrote put options that allow the holder to sell 50,000 of Crane’s shares to Crane at $11 per share. QUESTION: Calculate the incremental shares outstanding for Crane Limited. (Round answer to 0 decimal places, e.g. 5,275.) Incremental shares outstanding :...
Ivanhoe Limited purchased 50,000 call options during the year. The options give the company the right...
Ivanhoe Limited purchased 50,000 call options during the year. The options give the company the right to buy its own common shares for $7 each. The average market price during the year was $10 per share. Assume that Ivanhoe also wrote put options that allow the holder to sell 50,000 of Ivanhoe’s shares to Ivanhoe at $11 per share. Calculate the incremental shares outstanding for Ivanhoe Limited.
Amy Dyken, controller at Crane Pharmaceutical Industries, a public company, is currently preparing the calculation for...
Amy Dyken, controller at Crane Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Crane’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Long-term debt    Notes payable, 10% $1,020,000    9% convertible bonds payable 4,970,000    10% bonds payable 5,980,000      Total long-term debt $11,970,000 Shareholders’ equity    Preferred stock, 5% cumulative, $50 par value, 95,000 shares authorized, 23,750 shares issued and outstanding $1,187,500...
Gustavo bought 12 call options on the stock of Cartswell Carts. The stock price is currently...
Gustavo bought 12 call options on the stock of Cartswell Carts. The stock price is currently $61.75 per share. The strike price was $65, and the option premium was $2.50. a. Do these options give Gustavo the right to buy or sell shares of the company? How many shares does he have the right to buy/sell? b. Calculate the total amount Gustavo paid for these options. c. Calculate his profi t or loss if the price rises to $75 a...
Crane Ltd. had the following share transactions during its first year of operations: Jan. 6 Issued...
Crane Ltd. had the following share transactions during its first year of operations: Jan. 6 Issued 244,000 common shares for $1.50 per share. Jan. 12 Issued 61,000 common shares for $1.75 per share. Mar. 17 Issued 1,200 preferred shares for $105 per share. July 18 Issued 1,220,000 common shares for $2 per share. Nov. 17 Reacquired 244,000 common shares for $1.95 per share. Dec. 30 Reacquired 183,000 common shares for $1.80 per share.
On 1 January 2019, ABB Limited had 1,200,000 ordinary shares outstanding. It also had 100,000 shares...
On 1 January 2019, ABB Limited had 1,200,000 ordinary shares outstanding. It also had 100,000 shares of 9%, $10 par, non-cumulative preference shares outstanding for the whole year of 2019. ABB Limited declared and paid preference share dividend in 2019. During 2019, the company had the following transactions: On 1 March 2019 the company issued 150,000 new shares for cash. On 1 October 2019 the company purchased 600,000 of its own outstanding shares. Net income for 2019 was $240,000. Required:...
Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net...
Primus, Inc., owns all outstanding stock of Sonston, Inc. For the current year, Primus reports net income (exclusive of any investment income) of $616,000. Primus has 50,000 shares of common stock outstanding. Sonston reports net income of $216,000 for the period with 40,000 shares of common stock outstanding. Sonston also has 5,000 stock warrants outstanding that allow the holder to acquire shares at $11.00 per share. The value of this stock was $22 per share throughout the year. Primus owns...
Question 6 (11 marks) On 1 January 2019, Salt Limited had 1,200,000 ordinary shares outstanding. It...
Question 6 On 1 January 2019, Salt Limited had 1,200,000 ordinary shares outstanding. It also had 100,000 shares of 9%, $10 par, non-cumulative preference shares outstanding for the whole year of 2019. Salt Limited declared and paid preference share dividend in 2019. During 2019, the company had the following transactions: 1. On 1 March 2019 the company issued 150,000 new shares for cash. 2. On 1 October 2019 the company purchased 600,000 of its own outstanding shares. Net income for...
On December 31, 2017, Jackson Company had 100,000 shares of common stock outstanding and 30,000 shares...
On December 31, 2017, Jackson Company had 100,000 shares of common stock outstanding and 30,000 shares of 7%, $50 par, cumulative preferred stock outstanding. On February 28, 2018, Jackson purchased 24,000 shares of common stock on the open market as treasury stock paying $45 per share. Jackson sold 6,000 of the treasury shares on September 30, 2018, for $47 per share. Net income for 2018 was $180,905. Also outstanding at December 31, 2017, were fully vested incentive stock options giving...
Computing Diluted EPS: Stock Options Rand Inc. had net income of $1,760,000. During the year, 400,000...
Computing Diluted EPS: Stock Options Rand Inc. had net income of $1,760,000. During the year, 400,000 shares were outstanding on average and Rand's common stock sold at an average market price of $50 per share. In addition, Rand had 40,000 stock options outstanding to purchase a total of 40,000 common shares at $25 for each option exercised. Required a. Compute basic EPS. b. Compute diluted EPS.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT